Loans and leases and the allowance for credit losses | 3. Loans and leases and the allowance for credit losses Effective January 1, 2020 the Company adopted amended accounting guidance which requires an allowance for credit losses be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over their contractual term considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination. The initial allowance for these assets will be added to the purchase price at acquisition rather than being reported as an expense. Subsequent changes in the allowance will be recorded in the income statement as an adjustment to the provision for credit losses. The new guidance replaced the previous incurred loss model for determining the allowance for credit losses. The adoption resulted in a $132 million increase in the allowance for credit losses at January 1, 2020. Prior to January 1, 2020, the Company generally recognized the excess of cash flows expected at acquisition over the estimated fair value of the acquired loans as interest income over the remaining lives of such loans regardless of the borrowers’ repayment status. Effective with the adoption of the new accounting standard, the Company’s nonaccrual loan policy now applies to loans acquired at a discount. That change added $171 million to nonaccrual loans as of the January 1, 2020 adoption date. Past due and nonaccrual loans A summary of current, past due and nonaccrual loans as of June 30, 2020 and December 31, 2019 follows: Current 30-89 Days Past Due Accruing Loans Due 90 Days or More Nonaccrual Total (In thousands) June 30, 2020 Commercial, financial, leasing, etc. $ 28,855,500 53,005 10,703 284,654 $ 29,203,862 Real estate: Commercial 27,250,342 148,129 17,305 172,488 27,588,264 Residential builder and developer 1,418,354 33,752 — 1,748 1,453,854 Other commercial construction 7,983,195 23,911 24,801 85,426 8,117,333 Residential 12,746,530 218,870 479,027 306,907 13,751,334 Residential — limited documentation 1,715,896 25,537 — 118,695 1,860,128 Consumer: Home equity lines and loans 4,107,387 34,341 — 77,094 4,218,822 Recreational finance 6,342,914 30,170 — 24,152 6,397,236 Automobile 3,680,749 41,375 — 42,736 3,764,860 Other 1,346,276 8,910 3,919 42,750 1,401,855 Total $ 95,447,143 618,000 535,755 1,156,650 $ 97,757,548 3. Loans and leases and the allowance for credit losses, continued Current 30-89 Days Past Due Accruing Loans Due 90 Days or More (a) Accruing Loans Acquired a Discount Past Due 90 days or More (b) Purchased Impaired (c) Nonaccrual Total (In thousands) December 31, 2019 Commercial, financial, leasing, etc. $ 23,290,797 184,011 16,776 27 — 346,557 $ 23,838,168 Real estate: Commercial 26,311,414 165,579 6,740 — 15,601 158,474 26,657,808 Residential builder and developer 1,521,315 21,195 — — 753 3,982 1,547,245 Other commercial construction 7,204,148 95,346 3,360 — 1,237 32,770 7,336,861 Residential 12,760,040 451,274 486,515 5,788 143,145 235,663 14,082,425 Residential — limited documentation 1,858,037 65,215 181 — 66,809 83,427 2,073,669 Consumer: Home equity lines and loans 4,386,511 30,229 — 1,662 — 63,215 4,481,617 Recreational finance 5,484,997 36,827 — 99 — 14,219 5,536,142 Automobile 3,787,221 78,478 — — — 21,293 3,886,992 Other 1,395,240 45,978 5,156 32,056 — 3,512 1,481,942 Total $ 87,999,720 1,174,132 518,728 39,632 227,545 963,112 $ 90,922,869 (a) Excludes loans acquired at a discount. (b) Loans acquired at a discount that were recorded at fair value at acquisition date. This category does not include purchased impaired loans that are presented separately. (c) Accruing loans acquired at a discount that were impaired at acquisition date and recorded at fair value. A summary of outstanding loan balances for which COVID-19 related modifications were granted as of June 30, 2020 is presented below. These loans meet the criteria described in note 1 and, as such, are not considered past due or otherwise in default of loan terms. Loans to motor vehicle and recreational finance dealers comprised $3.3 billion and $823 million of the total COVID-19 modifications of commercial, financial, leasing and commercial real estate loans, respectively. (In thousands) Commercial, financial, leasing, etc. $ 5,302,196 Real estate: Commercial 7,802,006 Residential builder and developer 18,253 Other commercial construction 861,536 Residential 1,737,483 Residential — limited documentation 538,671 Consumer: Home equity lines and loans 88,162 Recreational finance 254,205 Automobile 326,113 Other 16,611 Total $ 16,945,236 3. Loans and leases and the allowance for credit losses, continued One-to-four family residential mortgage loans held for sale were $440 million and $414 million at June 30, 2020 and December 31, 2019, respectively. Commercial real estate loans held for sale were $255 million at June 30, 2020 and $28 million at December 31, 2019. The outstanding principal balance and the carrying amount of loans acquired at a discount that were recorded at fair value at the acquisition date for which interest income was recognized based on expected future cash flows that were included in the consolidated balance sheet at December 31, 2019 were as follows: (In thousands) Outstanding principal balance $ 769,414 Carrying amount: Commercial, financial, leasing, etc. 21,114 Commercial real estate 94,890 Residential real estate 341,807 Consumer 77,785 $ 535,596 Purchased impaired loans included in the table above totaled Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Purchased Other Purchased Other Impaired Acquired Impaired Acquired (In thousands) Balance at beginning of period $ 140,317 $ 93,687 $ 147,210 $ 96,907 Interest income (9,632 ) (9,666 ) (27,714 ) (19,383 ) Reclassifications from nonaccretable balance 16,419 3,457 27,608 8,322 Other (a) — 3,433 — 5,065 Balance at end of period $ 147,104 $ 90,911 $ 147,104 $ 90,911 (a) Other changes in expected cash flows included changes in interest rates and prepayment assumptions. Credit quality indicators The Company utilizes a loan grading system to differentiate risk amongst its commercial loans and commercial real estate loans. Loans with a lower expectation of default are assigned one of ten possible “pass” loan grades and are generally ascribed lower loss factors when determining the allowance for credit losses. Loans with an elevated level of credit risk are classified as “criticized” and are ascribed a higher loss factor when determining the allowance for credit losses. Criticized loans may be classified as “nonaccrual” if the Company no longer expects to collect all amounts according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more. Loan officers in different geographic locations with the support of the Company’s credit department personnel continuously review and reassign loan grades based on their detailed knowledge of individual borrowers and their judgment of the impact on such borrowers resulting from changing conditions in their respective regions. Factors considered in assigning loan grades include borrower-specific information related to expected future cash flows and operating results, collateral values, geographic location, financial condition and performance, payment status, and other information. At least annually, updated financial information is obtained from commercial borrowers associated 3. Loans and leases and the allowance for credit losses, continued with pass grade loans and additional analysis is performed. On a quarterly basis, the Company’s centralized credit department reviews all criticized commercial loans and commercial real estate loans greater than $1 million to determine the appropriateness of the assigned loan grade, including whether the loan should be reported as accruing or nonaccruing. The following table summarizes the loan grades applied at June 30, 2020 to the various classes of the Compan Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2020 2019 2018 2017 2016 Prior Loans Loans Total (In thousands) Commercial, financial, leasing, etc.: Loan grades: Pass $ 7,944,081 2,571,703 1,744,756 1,074,677 878,129 1,579,718 11,451,339 32,192 $ 27,276,595 Criticized accrual 313,697 88,164 164,361 64,980 50,254 82,987 868,964 9,206 1,642,613 Criticized nonaccrual 2,689 7,816 50,512 24,345 20,238 48,234 123,671 7,149 284,654 Total commercial, financial, leasing, etc. $ 8,260,467 2,667,683 1,959,629 1,164,002 948,621 1,710,939 12,443,974 48,547 $ 29,203,862 Real estate: Commercial: Loan grades: Pass $ 2,055,007 4,937,718 3,679,741 3,005,081 3,131,570 6,729,170 844,868 — $ 24,383,155 Criticized accrual 206,417 446,695 396,270 141,128 634,733 1,165,443 41,935 — 3,032,621 Criticized nonaccrual — 3,527 6,089 21,882 29,149 111,409 432 — 172,488 Total commercial real estate $ 2,261,424 5,387,940 4,082,100 3,168,091 3,795,452 8,006,022 887,235 — $ 27,588,264 Residential builder and developer: Loan grades: Pass $ 285,891 526,779 254,416 51,814 14,710 16,755 223,428 — $ 1,373,793 Criticized accrual 4,086 12,964 16,349 17,164 302 22,557 4,891 — 78,313 Criticized nonaccrual — — — — 302 1,446 — — 1,748 Total residential builder and developer $ 289,977 539,743 270,765 68,978 15,314 40,758 228,319 — $ 1,453,854 Other commercial construction: Loan grades: Pass $ 459,366 2,340,490 2,314,047 1,254,678 404,993 318,387 80,428 — $ 7,172,389 Criticized accrual 22,850 205,065 264,298 216,998 138,268 12,039 — — 859,518 Criticized nonaccrual — — — 350 57,773 22,171 5,132 — 85,426 Total other commercial construction $ 482,216 2,545,555 2,578,345 1,472,026 601,034 352,597 85,560 — $ 8,117,333 Increases to criticized loans as of June 30, 2020 as compared with March 31, 2020 were predominantly attributable to effects of the COVID-19 pandemic and the related regrading of loans totaled $3.7 billion, including $759 million of commercial loans, $2.3 billion of commercial real estate loans and $668 million of other commercial construction loans. 3. Loans and leases and the allowance for credit losses, continued The Company considers repayment performance a significant indicator of credit quality for its residential real estate loan and consumer loan portfolios. A summary of loans in accrual and nonaccrual status at June 30, 2020 for the various classes of the Company’s residential real estate loans and consumer loans by origination year is as follows. Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2020 2019 2018 2017 2016 Prior Loans Loans Total (In thousands) Residential: Current $ 1,386,049 1,446,544 627,380 711,769 735,767 7,785,981 53,040 — $ 12,746,530 30-89 days past due 2,291 7,259 6,718 20,267 4,256 177,700 379 — 218,870 Accruing loans past due 90 days or more 117 8,995 26,337 118,899 25,353 299,326 — — 479,027 Nonaccrual 29 4,223 2,930 5,696 950 292,859 220 — 306,907 Total residential $ 1,388,486 1,467,021 663,365 856,631 766,326 8,555,866 53,639 — $ 13,751,334 Residential - limited documentation: Current $ — — — — — 1,715,896 — — $ 1,715,896 30-89 days past due — — — — — 25,537 — — 25,537 Accruing loans past due 90 days or more — — — — — — — — — Nonaccrual — — — — — 118,695 — — 118,695 Total residential - limited documentation $ — — — — — 1,860,128 — — $ 1,860,128 Consumer: Home equity lines and loans: Current $ 852 4,931 2,550 2,731 155 60,569 2,687,506 1,348,093 $ 4,107,387 30-89 days past due — 20 — — — 1,770 — 32,551 34,341 Accruing loans past due 90 days or more — — — — — — — — — Nonaccrual — — — — — 5,895 1,196 70,003 77,094 Total home equity lines and loans $ 852 4,951 2,550 2,731 155 68,234 2,688,702 1,450,647 $ 4,218,822 3. Loans and leases and the allowance for credit losses, continued Term Loans by Origination Year Revolving Revolving Loans Converted to Term 2020 2019 2018 2017 2016 Prior Loans Loans Total (In thousands) Recreational finance: Current $ 1,453,572 2,021,651 1,055,732 728,343 410,077 673,539 — — $ 6,342,914 30-89 days past due 2,415 7,557 5,208 5,096 2,815 7,079 — — 30,170 Accruing loans past due 90 days or more — — — — — — — — — Nonaccrual 783 3,479 4,229 4,844 2,666 8,151 — — 24,152 Total recreational finance $ 1,456,770 2,032,687 1,065,169 738,283 415,558 688,769 — — $ 6,397,236 Automobile: Current $ 567,784 1,341,719 802,096 595,776 253,239 120,135 — — $ 3,680,749 30-89 days past due 1,495 9,879 10,557 10,642 5,590 3,212 — — 41,375 Accruing loans past due 90 days or more — — — — — — — — — Nonaccrual 1,125 7,176 10,987 11,054 7,058 5,336 — — 42,736 Total automobile $ 570,404 1,358,774 823,640 617,472 265,887 128,683 — — $ 3,764,860 Other: Current $ 93,225 174,085 73,089 47,297 8,532 32,837 915,187 2,024 $ 1,346,276 30-89 days past due 1,246 778 557 311 56 389 5,016 557 8,910 Accruing loans past due 90 days or more — — — — — 291 3,628 — 3,919 Nonaccrual 5,722 544 551 214 52 253 35,103 311 42,750 Total other $ 100,193 175,407 74,197 47,822 8,640 33,770 958,934 2,892 $ 1,401,855 Total loans and leases at June 30, 2020 $ 14,810,789 16,179,761 11,519,760 8,136,036 6,816,987 21,445,766 17,346,363 1,502,086 $ 97,757,548 The following table summarizes the loan grades applied at December 31, 2019 to the various classes of the Company’s commercial loans and commercial real estate loans. Real Estate Commercial, Residential Other Financial, Builder and Commercial Leasing, etc. Commercial Developer Construction (In thousands) December 31, 2019 Pass $ 22,595,821 25,728,725 1,419,162 7,092,799 Criticized accrual 895,790 770,609 124,101 211,292 Criticized nonaccrual 346,557 158,474 3,982 32,770 Total $ 23,838,168 26,657,808 1,547,245 7,336,861 3. Loans and leases and the allowance for credit losses, continued Allowance for credit losses For purposes of determining the level of the allowance for credit losses, the Company evaluates its loan and lease portfolio by loan type. Changes in the allowance for credit losses for the three months ended June 30, 2020 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (In thousands) Beginning balance $ 358,092 433,689 115,792 476,793 — $ 1,384,366 Provision for credit losses 69,400 159,090 2,850 93,660 — 325,000 Net charge-offs Charge-offs (32,608 ) (17,472 ) (1,609 ) (39,708 ) — (91,397 ) Recoveries 3,373 1,014 1,888 13,992 — 20,267 Net (charge-offs) recoveries (29,235 ) (16,458 ) 279 (25,716 ) — (71,130 ) Ending balance $ 398,257 576,321 118,921 544,737 — $ 1,638,236 Changes in the allowance for credit losses for the three months ended June 30, 2019 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (In thousands) Beginning balance $ 335,620 337,995 65,136 203,045 77,541 $ 1,019,337 Provision for credit losses 10,337 14,501 (2,376 ) 31,594 944 55,000 Net charge-offs Charge-offs (16,608 ) (10,165 ) (3,263 ) (39,370 ) — (69,406 ) Recoveries 6,506 965 1,514 15,951 — 24,936 Net charge-offs (10,102 ) (9,200 ) (1,749 ) (23,419 ) — (44,470 ) Ending balance $ 335,855 343,296 61,011 211,220 78,485 $ 1,029,867 Changes in the allowance for credit losses for the six months ended June 30, 2020 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (In thousands) Beginning balance $ 366,094 322,201 56,033 229,118 77,625 $ 1,051,071 Adoption of new accounting standard (61,474 ) 23,656 53,896 194,004 (77,625 ) 132,457 Provision for credit losses 135,994 247,756 12,141 179,109 — 575,000 Net charge-offs Charge-offs (48,991 ) (18,744 ) (6,711 ) (84,655 ) — (159,101 ) Recoveries 6,634 1,452 3,562 27,161 — 38,809 Net charge-offs (42,357 ) (17,292 ) (3,149 ) (57,494 ) — (120,292 ) Ending balance $ 398,257 576,321 118,921 544,737 — $ 1,638,236 3. Loans and leases and the all owance for credit losses, continued Changes in the allowance for credit losses for the six months ended June 30, 2019 were as follows: Commercial, Financial, Real Estate Leasing, etc. Commercial Residential Consumer Unallocated Total (In thousands) Beginning balance $ 330,055 341,655 69,125 200,564 78,045 $ 1,019,444 Provision for credit losses 16,608 10,298 (4,823 ) 54,477 440 77,000 Net charge-offs Charge-offs (25,108 ) (10,448 ) (6,635 ) (72,315 ) — (114,506 ) Recoveries 14,300 1,791 3,344 28,494 — 47,929 Net charge-offs (10,808 ) (8,657 ) (3,291 ) (43,821 ) — (66,577 ) Ending balance $ 335,855 343,296 61,011 211,220 78,485 $ 1,029,867 Despite the allocation in the preceding tables, the allowance for credit losses is general in nature and is available to absorb losses from any loan or lease type. A description of the methodologies used by the Company to estimate its allowance for credit losses prior to January 1, 2020 is included in note 4 of Notes to Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In establishing the allowance for credit losses subsequent to December 31, 2019, the Company estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and also estimates losses for loans and leases with similar risk characteristics on a collective basis. The amounts of specific loss components in the Company’s loan and lease portfolios are determined through a loan-by-loan analysis of larger balance commercial loans and commercial real estate loans that are in nonaccrual status. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on the fair value of the loan’s collateral as estimated at or near the financial statement date. As the quality of a loan deteriorates to the point of classifying the loan as “criticized,” the process of obtaining updated collateral valuation information is usually initiated, unless it is not considered warranted given factors such as the relative size of the loan, the characteristics of the collateral or the age of the last valuation. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit department. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. For residential real estate loans, including home equity loans and lines of credit, the excess of the loan balance over the net realizable value of the property collateralizing the loan is charged-off when the loan becomes 150 days delinquent. That charge-off is based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company gives consideration to the required repayment of any first lien positions related to collateral property. Modified loans, including smaller balance homogenous loans, that are considered to be troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. 3. Loans and leases and the allowance for credit losses, continued Information with respect to loans and leases that were considered nonaccrual at the beginning and end of the reporting period and the interest income recognized on such loans for the three-month and six-month periods ended June 30, 2020 and 2019 follows. June 30, 2020 March 31, 2020 January 1, 2020 Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Amortized Cost with Allowance Amortized Cost Total Amortized Cost Amortized Cost Interest Income Recognized Interest Income Recognized (In thousands) Commercial, financial, leasing, etc. $ 138,556 146,098 284,654 286,647 346,743 1,298 3,036 Real estate: Commercial 57,675 114,813 172,488 188,469 173,796 4,697 5,789 Residential builder and developer 1,748 — 1,748 3,204 4,708 11 59 Other commercial construction 42,969 42,457 85,426 34,935 35,881 5,716 6,577 Residential 80,772 226,135 306,907 293,638 322,504 5,029 11,848 Residential — limited documentation 26,460 92,235 118,695 119,317 114,667 256 457 Consumer: Home equity lines and loans 38,890 38,204 77,094 63,071 65,039 760 2,219 Recreational finance 16,264 7,888 24,152 13,405 14,308 154 306 Automobile 35,510 7,226 42,736 19,251 21,293 45 92 Other 7,747 35,003 42,750 39,811 35,394 161 315 Total $ 446,591 710,059 1,156,650 1,061,748 1,134,333 18,127 30,698 3. Loans and leases and the allowance for credit losses, continued June 30, 2019 March 31, 2019 January 1, 2019 Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Amortized Cost with Allowance Amortized Cost Total Amortized Cost Amortized Cost Interest Income Recognized Interest Income Recognized (In thousands) Commercial, financial, leasing, etc. $ 150,974 72,759 223,733 245,819 234,423 3,635 6,716 Real estate: Commercial 52,443 150,673 203,116 207,709 203,672 2,314 3,410 Residential builder and developer 1,429 4,556 5,985 4,392 4,798 35 219 Other commercial construction 25,572 7,197 32,769 19,899 22,205 544 1,181 Residential 57,323 153,599 210,922 210,266 233,352 2,990 6,589 Residential — limited documentation 25,796 61,755 87,551 84,863 84,685 274 526 Consumer: Home equity lines and loans 25,530 41,397 66,927 69,245 71,292 1,461 2,771 Recreational finance 6,493 4,660 11,153 10,972 11,199 142 284 Automobile 13,852 6,318 20,170 21,209 23,359 53 107 Other 2,757 301 3,058 7,237 4,623 125 247 Total $ 362,169 503,215 865,384 881,611 893,608 11,573 22,050 In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes statistically developed models to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators including loan grade and borrower repayment performance inform the models, which have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment, gross domestic product and real estate prices. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. At both January 1 and June 30, 2020, the Company utilized a reasonable and supportable forecast period of two years. Subsequent to this forecast period the Company reverted, ratably over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, product expansions into new markets, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence its loss estimation process. The Company’s reserve for off-balance sheet credit exposures was not material at June 30, 2020 and December 31, 2019. Loan modifications During the normal course of business, the Company modifies loans to maximize recovery efforts. If the borrower is experiencing financial difficulty and a concession is granted, the Company considers such modifications as troubled debt restructurings and classifies those loans as either nonaccrual loans or renegotiated loans. The types of concessions that the Company grants typically include principal deferrals and interest rate concessions, but may also include other types of concessions. 3. Loans and leases and the allowance for credit losses, continued The table that follows summarizes the Company’s loan modification activities that were considered troubled debt restructurings for the three-month and six-month periods ended June 30, 2020 and 2019: Post-modification (a) Number Pre- modification Recorded Investment Principal Deferral Interest Rate Reduction Other Combination of Concession Types Total Three Months Ended June 30, 2020 (Dollars in thousands) Commercial, financial, leasing, etc. 135 $ 55,136 $ 17,551 $ — $ 31,605 $ 5,514 $ 54,670 Real estate: Commercial 46 41,872 10,511 333 4,800 16,348 31,992 Residential builder and developer 1 91 — — — 90 90 Residential 25 8,872 3,101 — — 6,533 9,634 Residential — limited documentation — — — — — — — Consumer: Home equity lines and loans 120 7,571 147 — — 7,437 7,584 Recreational finance 271 10,795 10,795 — — — 10,795 Automobile 1,461 26,352 26,352 — — — 26,352 Other 335 2,183 682 — — 1,501 2,183 Total 2,394 $ 152,872 $ 69,139 $ 333 $ 36,405 $ 37,423 $ 143,300 Three Months Ended June 30, 2019 Commercial, financial, leasing, etc. 24 $ 2,597 $ 667 $ — $ — $ 1,891 $ 2,558 Real estate: Commercial 14 10,340 2,577 — — 7,641 10,218 Other commercial construction 1 1,038 — — 1,033 1,033 Residential 26 7,513 4,008 — — 4,034 8,042 Residential — limited documentation 2 612 160 — — 465 625 Consumer: Home equity lines and loans 13 1,273 53 — — 1,225 1,278 Recreational finance 1 15 15 — — — 15 Automobile 12 189 189 — — — 189 Total 93 $ 23,577 $ 7,669 $ — $ — $ 16,289 $ 23,958 3. Loans and leases and the allowance for credit losses, continued Post-modification (a) Number Pre- modification Recorded Investment Principal Deferral Interest Rate Reduction Other Combination of Concession Types Total Six Months Ended June 30, 2020 (Dollars in thousands) Commercial, financial, leasing, etc. 167 $ 67,828 $ 22,617 $ — $ 31,605 $ 12,501 $ 66,723 Real estate: Commercial 56 81,514 11,866 333 4,800 52,316 69,315 Residential builder and developer 1 91 — — — 90 90 Residential 52 19,050 6,348 — — 15,510 21,858 Residential — limited documentation 9 2,980 2,667 — — 1,232 3,899 Consumer: Home equity lines and loans 126 8,309 559 — — 7,771 8,330 Recreational finance 274 10,885 10,885 — — — 10,885 Automobile 1,470 26,534 26,534 — — — 26,534 Other 335 2,183 682 — — 1,501 2,183 Total 2,490 $ 219,374 $ 82,158 $ 333 $ 36,405 $ 90,921 $ 209,817 Six Months Ended June 30, 2019 Commercial, financial, leasing, etc. 89 $ 33,212 $ 7,141 $ — $ — $ 26,161 $ 33,302 Real estate: Commercial 29 19,581 3,564 — — 15,608 19,172 Residential builder and developer 2 1,330 1,068 — — — 1,068 Other commercial construction 2 1,456 — — 1,399 1,399 Residential 43 11,329 5,759 — — 6,307 12,066 Residential — limited documentation 3 848 399 — — 465 864 Consumer: Home equity lines and loans 20 1,749 90 — — 1,679 1,769 Recreational finance 5 103 103 — — — 103 Automobile 32 506 469 — — 37 506 Total 225 $ 70,114 $ 18,593 $ — $ — $ 51,656 $ 70,249 (a) Financial effects impacting the recorded investment included principal payments or advances, charge-offs and capitalized escrow arrearages. The present value of interest rate concessions, discounted at the effective rate of the original loan, was not material. Troubled debt restructurings are evaluated for impairment giving consideration to the impact of the modified loan terms on the present value of the loan’s expected cash flows. Impairment of troubled debt restructurings that have subsequently defaulted may also be measured based on the loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Charge-offs may also be recognized on troubled debt restructurings that have subsequently defaulted. Loans that were modified as troubled debt restructurings during the twelve months ended June 30, 2020 and 2019 and for which there was a subsequent payment default during the six-month periods ended June 30, 2020 and 2019, respectively, were not material. The amount of foreclosed residential real estate property held by the Company was $59 million and $76 million at June 30, 2020 and December 31, 2019, respectively. There were $273 million and $402 million at June 30, 2020 and December 31, 2019, respectively, of loans secured by residential real estate that were in the process of foreclosure. Of all loans in the process of foreclosure at June 30, 2020, approximately 40% were government guaranteed. |